Karim Benzema scored his ninth LaLiga goal of the season but it was not enough as Real Madrid suffered a 2-1 loss, their first defeat of the season, at Espanyol.
The hosts took the lead after just 17 minutes courtesy of a Raul de Tomas strike, a goal that separated the two sides at the break.
Aleix Vidal then doubled the hosts' lead on the hour mark, before Benzema tucked home in the 71st minute.
The Frenchman's goal proved to be a mere consolation as the visitors left empty-handed.
With Barcelona and Atletico Madrid facing off on Saturday, it was a good chance for Carlo Ancelotti to extend their lead at the top, but they lost the opportunity.
This means the Los Blancos have not won any of their last three matches, having drawn against Villarreal, before their shock 2-1 home loss against Sheriff in the Champions League.
Despite the loss, Real are joint-top of the table on 17 points, same as Atletico Madrid, who beat Barcelona 2-0 on Saturday.
The Catalans, who have a match at hand against their rivals, are currently 12th on the table.